The Financial Services Commission (FSC) of Korea has initiated a comprehensive reform of savings bank regulations to ensure their lending activities support the broader real economy, rather than focusing primarily on real estate. This policy aims to address structural challenges such as market volatility, rapid digital transformation, and sector polarization. The FSC recognizes the need for savings banks to transition from short-term profit-driven operations to stable, community-oriented financial services. The reform, titled ‘Savings Bank Sound Development Plan,’ was discussed with industry leaders, regulators, and experts on February 23, 2026. The FSC expressed appreciation for the sector’s efforts in managing real estate project financing risks and emphasized the importance of structural change for long-term sustainability.
The policy impacts savings banks, small and medium-sized enterprises (SMEs), mid-sized companies, individual business owners, and local communities. Key measures include expanding the main corporate lending targets from SMEs to mid-sized firms, increasing support for small business owners and sole proprietors, and revising regulations on capital and risk management. Large savings banks meeting certain criteria will gain new business opportunities, such as issuing independent debit and prepaid electronic payment instruments. The plan also includes rationalizing credit limits for banks with assets over KRW 1 trillion and enhancing liquidity and risk management systems.
Implementation began with a high-level meeting on February 23, 2026, involving the FSC, savings bank representatives, the Financial Supervisory Service, Korea Deposit Insurance Corporation, and financial experts. The FSC will gradually adjust regulations, including increasing the limit on unlisted stock holdings and separating loan products for sole proprietors. The reform introduces differentiated capital and governance requirements based on asset size, with stricter standards for banks exceeding KRW 5 trillion. The FSC will also improve monitoring systems and liquidity ratios, and establish savings bank asset management companies to strengthen bad debt handling.
Frequently asked questions include: What are the main changes for savings banks? The reforms expand lending to mid-sized firms and small business owners, update risk management, and allow new business activities for large banks. How will this affect borrowers? SMEs, mid-sized companies, and sole proprietors will have greater access to credit and financial products. When will these changes take effect? The plan is being implemented in phases following the February 23, 2026, policy meeting, with ongoing regulatory adjustments and consultations.
Metaqsol opinion: The Financial Services Commission’s reform is a significant move to modernize Korea’s savings bank sector and reduce concentration in real estate lending. By broadening the scope of lending to include mid-sized companies and small business owners, and strengthening risk and liquidity management, the policy aims to foster sustainable growth and financial stability. The phased approach and asset-based regulatory differentiation demonstrate a commitment to responsible sector evolution. These changes are expected to enhance the role of savings banks in supporting regional economies and increase consumer trust.